The U.S. dollar edged lower after FOMC minutes while the Canadian dollar was the best performing currency of the day, following BoC's optimistic statements. Oil will be monitored closely today, ahead of the OPEC meeting. Meanwhile, the positive comments for Eurozone’s economic development failed to help euro recapture its yesterday’s losses.
FOMC Minutes Less Hawkish Than Expected; Greenback Edged Lower
The U.S. dollar slipped against the majors on Wednesday as FOMC minutes disappointed market participants. Traders were expecting hawkish statements signalling a rate hike in June, however, U.S. central banks committee believes that is prudent to adopt the wait-and-see stance for a while to ensure that "the recent slowdown in the pace of the economic activity had been transitory". Many FOMC members continue to mention that an interest rate increase is coming soon and the percentage for a rate hike in June is still high at 83.1% according to CME FedWatch tool.
The reasons behind the committee's decision to appear less hawkish than expected and stand back from further tightening for now, even though many sectors of the economy are improving, most probably comes from the need to offset the uncertainty which occurred in the market from Trump's administration. Tomorrow’s U.S. GDP growth will be significant for the committee’s interest rate decision in June’s policy meeting.
USD/JPY – Technical Outlook
The Federal Reserve minutes failed to surprise and drove the U.S. dollar lower during yesterday’s session. The USD/JPY pair found a strong resistance obstacle on the 100-daily SMA which overlaps with the 112.20 barrier and rebounded on it while it completed a negative daily session. Over the last trading periods, the price lost its strong momentum and is developing near the three simple moving averages (50, 100 and 200) SMAs. We could experience a run above the 112.20 handle that will push the pair further up at the descending falling trend line near 113.60. On the other hand, a slip below the three SMAs will hit the 110.20 support level.
Technical indicators on the daily chart are biased slightly lower, however, the stochastic oscillator is moving to the upside. The MACD oscillator is moving below the trigger line while it hit the neutral area suggesting a weaker price action in the next few periods. In addition, the Relative Strength Index (RSI) is following a downward path below 50 and is flattening, confirming the recent neutral attitude of the price.
Oil Recorded Seven Winning Days in a Row as OPEC is Expected to Extend Production Cuts
The day of the awaited OPEC meeting, that will be led by Saudi Arabia came. OPEC’s production cuts in last November...
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